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Understanding what motivates employees-not what makes them happy, but what makes them come to a company, stay and invest their talents in the business-is critical to developing an effective people strategy. Likewise, the ongoing effectiveness of specific reward systems in supporting that strategy depends on understanding which reward elements have the greatest impact on the people who are most important to the companys success.
And the question is, Do incentives and rewards work? Do incentives make people more efficient and effective? Do incentives like paid holidays motivate and retain employees? My view is that it does, but only for short term periods. (www.e-reward.co.uk / Alfie Kohn;1998). It produces temporary compliance. Because motivation is based upon the intrinsic and extrinsic rewards the employees receive. And there is a hierarchy of human needs, one after another. (A.Maslow /2004; Handouts: MAP). Rewards do not create an enduring commitment to work but temporarily, change employees short term behaviour. However, it is required to know more about financial and non-financial rewards and their role in motivating and retaining employees. If the employees are motivated to work that means they like their work and it may be obvious that they will retain in their job.
Organisation and employee Rewards:
I have selected an ongoing work situation in one of the professional hair salons. The salon offers standard hair cutting services, hair perming, hair straightening, hair colouring and also special hair styling require for special occasions. (Personal search)
Job titles and the rewards linked:
There are 5 stylists and 3 shampoo girls in the salon. Of the 5 stylists, 3 are professional stylists. One of the professional stylists Alan is also the salon leader.
4 of the stylists excluding Alan are each paid the similar basic salary of approx. 600 per week. Not very high for their job titles..Alan is paid slightly above 600. In addition to the basic pay, the stylists are paid an additional commission of approx 30% on the cost of their customers visit. As one of the employees put it: 30% of the price of my customers coiffure. The commission for the creative stylists and professionals are similar but the professional stylists are able to command a higher rate on hair cuts given to customers only charge for additional hair service like hair treatment, hair colouring are the same across the board.
The shampoo girls are paid much less than the basic pay of the stylists and this is their only source of financial reward as they are not able to command commission. However, they get some tips from some of their customers which is also an additional income / financial reward. Besides, they are doing on the job training and are actually gaining the indirect non-financial reward of gaining some experience and the opportunity to work on customers hair as well.
Money in attracting, motivating and retaining:
Money has symbolic value
Certainly, people/stylists need money and therefore want money. While money can motivate, the stark reality is that cash is not the only motivator in the above case study. Money may itself have no intrinsic meaning, but it acquires significant motivating power because it comes to symbolise so many intangible goals. Moreover, it acts as a symbol in different ways for different people? and for the same person at different times. Without doubt, pay is often a dominant factor in the choice of employer, and cash is an important consideration when people are deciding whether or not to stay with as organisation. But there are a host of other motivators? (www.e-reward.co.uk)
Take, for example, security, job satisfaction, intellectual stimulation and career development, the stylists and shampoo girls are with the organisation because they are satisfied with their jobs as they get financial rewards and have job security. At the same time Doubts have been cast on the effectiveness of money as a motivator:
Frederick Herzbergs influential research in 1950s America examined the causes of work satisfaction and dissatisfaction among a (small) group of accountants and engineers. He discovered that was the two most common factor related to positive feeling about the job (and, therefore, motivation) were achievement and recognition.
According to Herzberg, while the lack of money may cause dissatisfaction, money does not result in lasting satisfaction. (Theory X and Theory Y; 2004)
More recently, Jeffery Pfeffer; 1998, professor of organisational behaviour, offered a more damming general critique of the motivational impact of individualised rewards.
His central thesis is that pay cannot substitute for a working environment high on trust, fun and meaningful work. He has a harsh warning for managers who ignore that message: they will be doomed to continual tinkering with pay which, at the end of the day, will accomplish very little? at great cost. As said by one of the stylists that pleasant working conditions were the intrinsic rewards they were getting from the salon.
But do financial incentives motivate people?
The answer, according to American pay guru Alfie Kohn; 1998, is absolutely not. One of his most influential studies was a 1998 article for the American Management Associations compensation magazine in which the challenges what he calls the behaviourist dogma about money and motivation. In his view, it is simply not true that there is powerful scientific evidence supporting the efficacy of various forms of financial incentive. Kohn writes: No controlled scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system. He quotes with approval a Kohn warns that incentive plans, bonuses and other types of reward, far from encouraging higher levels of achievement, disrupt employees performance and motivation. This is because employees will think more about what they will earn, rather than the job itself. When you look at how people motivated, says Kohn, it is disturbingly clear that the more you use rewards to? Motivate? People, the more they tend to lose interest in whatever that had to do to get the rewards. For Kohn, there is growing body of research, which has repeatedly shown that the more salient or reinforcing the reward is, the more it erodes intrinsic interest.
There were some perks in working in salon. They were entitled to free haircuts, colouring and treatments. Their family members are entitled to discounts as well. Awards like hairstylist of the month, which was based on customer feedback, sales performance in terms of the number of customers one had and also colleagues nominations was considered a non-financial reward. Aside from the financial rewards, flexible working hours was also a factor that made them happy and motivated. Although the working hours was from 10am- 6pm on weekdays and 10am-4pm on weekends, the stylists were not unnecessarily tired out as they could opt to take time off when there isnt a full customer booking on all day. This would apply as long as there are at least 3 stylists in the salon at any one time. Other reasons given for feeling motivated was the pleasant work conditions, good relationship with co-workers and a strong interest and satisfaction derived from the job. The cosy work environment as seen by the space area of the salon with pleasant music played over the salons radio everyday is contributions to motivational factors.
2 of the stylists and 2 of the shampoo girls interviewed as of equal importance to pay ranked good working relationship. As one stylist puts it: this is like a team and we need to work closely together. If I cant get along with someone in my team how can I feel motivated to do well as well as to do a proper job? Such an ideology does contribute to the effective working of division of labour as was explained and described earlier.(Personal Search)
Craig N. Clive in his article (www.baylights.com/articles/1298.html;1998) has suggested that companies should consider adopting non-financial rewards programs to motivate and retain employee shortages. Raising wages and incentives pay does not help to reduce turnover. Raising compensation only in fact increased turnover rates. Turnover declines when the employer combines pay increase with efforts to improve career development and corporate communications and efforts to provide flexible staffing (i.e. non-financial rewards programs).
Additionally, another survey (www.baylights.com) asked employees what they feel were the top ten motivators in the work environment. Their responses indicated that most important motivator is interesting and challenging work; followed by recognition for good work, a sense of belonging, job security, and good wages. Other motivators include; respect as an individual, good working conditions, open communication with the management, opportunity for advancement and competent leadership. So what are non-financial reward programs? The first and most often overlooked or short shrifted is the performance appraisal discussion. Seminal researched performed by psychologists Lawrence Lindahl over five decades consistently shows that workers rate appreciation for a job well-done as their number one motivator. Interestingly, supervisors rank it near the bottom. Tragically, most executives cannot discern that appreciation includes both rewards AND recognition. (www.e-rewards.co.uk/Tony DiRomualdo; Dec 9, 2003). Employees want to know how they are doing the job. Often a performance discussion tells the employee they will receive a raise and that they are doing fine with no explanation or two way communications. There are many programs like employee recognition, employee teams to resolve issues or problems, company sponsored training, continuing education, employee of the month program etc which reward employee performance and cost little or nothing to implement, rather most of the programs also benefit the organisation.
Professional growth and development opportunities- Generally the supervisors provide the opportunity to participateSupervisors may provide employees opportunities to participate in educational programs or other activities that will expand their skills/knowledge (Employees benefit by developing new skills, and the institution benefits from the additional expertise individuals bring to the job. For example in the above case study, what motivated the shampoo girls was more non-financially oriented. It was their aim of becoming full fledged and certified stylists kept the shampoo girls going. Though their job is tough as washing several customers hair per day often results in peeling off the skin on their pal with blisters at times due to the constant abrasion and contact with shampoo and water. Internal Equity- (Adams Equity Theory 1965) Employees, especially those with long term may be concerned with comparing their pay with that of co-workers, supervisors or even subordinates than with compensation of someone who works for another company (Deutsch, 1985, Werner Ones, 2000) Furthermore, research indicates that when employees believe the process used to determine their ay is fair, they are likely to believe that they are fairly paid (Deutsch, 1985). Some managers do not share information on how pay decisions are made and then attempt to limit informal internal comparisons by ordering employees not to share what they are paid with other employees. This strategy seldom works and frequently backfires because employees often conclude that secrecy means that management has something to hide. (American Compensation Association; WorldatWork Journal; 2002). Another non financial motivational factor is to, Establish conditions under which empowerment takes place. Empowerment is the giving of responsibility and authority to employees to get things done. All employees want to feel that they are trusted and valued members of the organisation.
As Roger Holtback, president of Volvo Car Corp says, "Nothing creates more self respect among employees than being included in the process of making decisions. (www.e-rewards.co.uk)
Intrinsic and Extrinsic Rewards:
Intrinsic rewards and extrinsic rewards both these reward types can motivates the employees. Reward policies should take into account of the organisations goals, values and organisations goals, values and culture, and of the challenges of more competitive global economy. (Ed Lawler / New Pay; 1984/ Marchington and Wilkinson).As organisation matures or moves into a regeneration phase, it is necessary to develop or revise its reward philosophy and reward strategies, policies and practices which help to achieve new business goals and support organisational and cultural change.
The reward systems are based on many assumptions such as retaining , attracting , and also motivating the employees. The most important component of any reward system are the Financial Rewards but apart from these financial rewards there are also some other reward systems which motivate the employees.
Conclusion and Recommendations:
To get the work situation going and to keep it productive requires the workers to be motivated. Several factors can be identified as motivational factors for the people at salon. Obliviously pay was the basic factor, which kept them motivated. However, it was the element of commission as one would guess that was the push factor for the stylists. Having a fairly standard and competitive basic pay meant that to increase their own financial rewards, they had to earn more commission and that meant that they were motivated to get more customers hair done up. But at the same time the question is what can really motivate the employees and thats what managers need to understand. Various organisations have the notion that employees have to be bribed to give off their best, to perform better and to be more productive.
And yet, there are the intangibles that are often never made use of; factors like praise, recognition, job satisfaction etc. Organisations want immediate results and there are only two ways to get that i.e. using fear motivation or by the provision of incentives. The trouble with both these factors is that they are only effective for a short period of time. After a while, the fear or incentives offered have to be increased in order to retain its motivational value, and hence a vicious cycle of incentives and fear is created. Perhaps organisations need to re-think their motivational strategies and to start considering using more intangibles. Managers have the unenviable job of motivating their employees. Firstly, they have to be motivated themselves; only then will they be in a state of mind to go about motivating their staff.
This needs constant work. Motivation is like fire; unless you keep adding fuel to it, it dies. For example, bonus payments at the end of the year are sure to raise morale, but probably for only a few days. Once the euphoria dies off, employees go back to their original motivational state. There are two major things that managers can do to effectively manage their employees' motivation. Firstly, is the acquisition of feedback from employees on factors affecting their motivational state and secondly, is the implementation and creation of a conducive and "happy" work environment. Feedback can be in the form of direct one to one communication, an attitude survey or else a motivational questionnaire. Hence the feedback received must be implemented and then constantly improved and developed. (www.uth.tmc.edu)